McCormick & Company, Incorporated (NYSE: MKC) has entered into a purchase agreement to buy the parent company of Cholula Hot Sauce for $800 million in cash. McCormick is preparing to hold the Cholula brand name in both the retail and foodservice channels. The firm is forecasting that this decision will promote long-term shareholder value. As per the agreement, MKC will completely own the parent company of Cholula.
This acquisition will expand the reach through complementary products and a huge customer base, and enhance the market reach by extending branded foodservice distribution. The attractive margin profile will gradually increase value to the Consumer and Flavor Solutions segment of McCormick. The packaged food firm is also planning to increase the brand awareness of Cholula.